Gwanda solar price markdown gets nod

SHANGHAI Stock Exchange listed, CHiNT Electric Co, contracted by Zimbabwe Power Company to build the 100 megawatt Gwanda solar plant, has confirmed feasibility of building the power plant at a significantly reduced price of $140 million.

The Gwanda plant tender had been awarded by the State Procurement Board to the lowest bidder to specification at engineering, procurement and construction cost of $172,8 million.

CHiNT confirmed the possibility of building the power plant at the discounted price in a letter to ZPC, which followed a request by Government for reduction of the initial price, since part of the project funding would now be raised locally.

Further, Finance and Economic Development Minister Patrick Chinamasa, in the request for a price mark down, cited recent improvements in technology used in the construction of power plants globally and their impact on solar project costs.

Minister Chinamasa recently wrote to ZPC stating that most of the cost for the power plant entailed civil works, which would be sourced locally, except the engineering, procurement and constructioncontract of the Gwanda solar project.

And CHiNT confirmed that it had noted that the technology for building solar power plants had innovated, a development that has led to fluctuation of unit price. CHiNT stressed it would still build a plant of the same high quality, as planned.

“Referring to your letter dated April 5, 2017 with regard to the above mentioned project (Gwanda solar), we are aware that the technology utilised for the implementation of solar power plant project is increasingly innovated, which leads to an effective fluctuation on the unit prices,” CHiNT said in the letter.

The Chinese company said it would still select the latest photovoltaic modules to achieve an updated technical scheme. It said the arrays and ancillary facilities would be rearranged on the solar farm, which would ensure power benefits and a lower price.

“Please find here the attached technical drawings, catalogue of crystalline PV modules and a revised price schedule,” said CHiNT in letter of confirmation.

CHiNT’s local partner had also earlier written to ZPC confirming its willingness to comply with the request made by Government, which intervened to assist in the raising of part of the project funding locally through bonds to be floated by a local bank. It said the price may further come down due to 10 percent duty exemptions.

“We have reached a unilateral decision to adjust downwards the tender price for Gwanda 100MW solar power generation project. Intratrek Zimbabwe and Chinese technical partner, CHiNT Electric Co, Ltd were adjudged to be the lowest bidder to specification after a formal tender process for the project, resulting in award and subsequent signing of the EPC contract 304/2015 in October 2015.

“Consequently, we hereby submit the reduced price of $139,2 million, a reduction of almost 20 percent from the tender price of $172,8 million. Attached is the revised bill of quantities showing reduction in price of solar panels from $96,5 million to $64,3 million,”

Intratrek said in the letter it wrote to ZPC. Intratrek executive chairman Wilson Manase said technological innovation, especially the architecture and composition relating to solar panels had improved with time and the dynamics had ushered in improved technology efficiencies.

According to Mr Manase, the initial EPC contract price of $172,8 million included the perceived risk premium foreign investors normally include on quotations for Zimbabwean investments, which analysts say ranges between 15 and 20 percent.

He said the reduction in price had also been made possible by technological improvements over time, with the tender having been floated in 2013, bid submissions done in early 2014 while the contract for the Gwanda solar plant was signed in 2015. He said the time lapse saw price reduction of key components, the PV modules of solar panels, of between 6 and 9 percent annually.

“International trends for solar technology, a price reduction has been agreed to also match the approved renewable energy feed in tariff being offered by the Zimbabwe Energy Regulatory Authority for 12,4 cents per kilowatt hour,” he said.

Initially, when feasibility study for the project was done by Shanghai Electric Power Design Institute, Chinese Solar power experts, the tariff was pegged at 18c per kWh.

“As the local company to be awarded a solar power generation EPC contract, we view it as our patriotic duty to interrogate benefits brought by technological progress in this sector. We are inspired by a deep wish to add value to the project through improved value proposition whose key pillar should encompass savings from technological improvements accompanying price reduction.

Intratrek said the price reduction would translate to a competitive tariff for the solar plant and would also improve the investment attractiveness for the project.